Arabica Prices Seen Rebounding, But Set For Annual Decline

By Steve Wynne-Jones
Share this article
Arabica Prices Seen Rebounding, But Set For Annual Decline

Arabica coffee prices will rise 14% by the end of the year, recovering some ground after falling sharply this month, though an uptick in Brazilian production will see prices end 2020 down year-on-year, a Reuters poll of 11 traders and analysts showed.

Arabica prices will end 2020 at $1.20 per pound, up 14% from Tuesday's close, according to the median forecast of survey participants, but still 7% down from the market close at the end of 2019.

Price Decrease

Prices have tumbled 19% so far this month, partly due to a rise in ICE exchange stocks and the prospect of a record crop in Brazil later this year.

Top producer Brazil enters an on-year in its biennial crop cycle in 2020/21 and respondents expect a crop of 66.9 million 60-kg bags, up from a median estimate of 59.0 million in the prior season.

The global supply balance is expected to swing into a surplus of 2.75 million bags in the 2020/21 season versus a deficit of 3.0 million in the prior season.


Global Recovery

"A recovery in global production, following the hot weather in late 2019, should push the coffee market back into a surplus in 2020/21, which will add to stocks and weigh on prices," said Caroline Bain, chief economist at Capital Economics.

Arabica prices hovered around the lowest levels in a decade for much of last year as they struggled to absorb the record 2018/19 crop. They recovered by the end of the year to hit two year highs, but have come off sharply in January.

Prices of robusta coffee, primarily used for instant coffee or added to blends as a cheaper ingredient, are seen ending the year at $1,425 a tonne, up 7% from Tuesday's close and up 3% versus the market close at the end of 2019.

Production in Vietnam, the world's top robusta producer, is forecast at 30.0 million bags in 2019/20, little changed from the U.S. Department of Agriculture's estimate of 30.4 million bags for the 2018/19 season.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine

Get the week's top grocery retail news

The most important stories from European grocery retail direct to your inbox every Thursday

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our terms & conditions and privacy policy. You can unsubscribe at any time.